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The Commercial Court (Calver J) has summarily dismissed claims for in excess of U$200 million brought against the former President of Ukraine and the former Governor of its Central Bank in respect of an alleged conspiracy and other intentional wrongdoing in connection with a “bail in” adopted by the Ukrainian authorities in relation to a nationalised Ukrainian bank.

The proceedings arose out of Ukraine’s nationalisation of Commercial Bank PrivatBank (“PrivatBank”), which was for many years the largest bank in Ukraine. PrivatBank was nationalised in circumstances where the Ukrainian authorities had discovered a massive capital shortage at the bank, estimated at US$4-5 billion. PrivatBank has subsequently brought proceedings in the English Court in fraud against its former owners and controllers.

As part of the nationalisation process, Ukraine’s Central Bank, the National Bank of Ukraine (the “NBU”), designated certain persons as “related parties” of PrivatBank such that their claims against PrivatBank would be “bailed in” as part of its recapitalisation. Those so designated included the First Claimant (“Mr Surkis”) and Second to Seventh Claimants, which were English LLPs alleged to be owned by his family (the “Surkis Family Companies”). 

By their Claims, the Claimants alleged that the Defendants – the President of Ukraine (“Mr Poroshenko”) and the Governor of the NBU (“Mrs Gontareva”) at the time of the nationalisation process, but each of whom has since left office – conspired to use their alleged influence to procure the designation of the Surkis Family Companies with a view to depriving them of funds held with PrivatBank, so as to pressurise Mr Surkis to transfer his holding in a Ukrainian media group to Mr Poroshenko.     

Calver J held that the claims were barred by state immunity, by the foreign act of state doctrine, and that, in the case of the Mrs Gontareva, the Claims also had no real prospect of success because there was no properly pleaded or arguable case of intentional wrongdoing against her.

As regards state immunity, the judgment provides important guidance on the application of the principle whereby state immunity applies to claims against current or former state agents in respect of their conduct as such and on waiver of immunity and submission to jurisdiction. In particular: 

  • So far as concerns the state agents principle, Calver J rejected the Claimants’ argument that their allegations were in respect of the private acts of the Defendants ([71]-[81]) emphasising that it was important to focus on the Claimants’ pleaded allegations, the essence of which was that the Defendants used their influence as state agents in relation to the designation, and it was nothing to the point whether such alleged influence was used for private or improper purposes. 
  • So far as concerns waiver and submission to jurisdiction, Calver J emphasised that the immunity in issue belonged to Ukraine and rejected the Claimants’ arguments that it had been waived. In summary, Calver J held that: (i) Mrs Gontareva’s participation in the proceedings was incapable in law of amounting to a waiver of Ukraine’s immunity ([86]-[107]); (ii) in any case, Mrs Gontareva’s participation in the proceedings was in fact not such as to amount to an election not to raise state immunity, because she was entitled to see how the case was pleaded against her before raising state immunity in her Defence, and to plead to the merits of the Claims without prejudice to her primary contention on state immunity ([108]-[110]); (iii) correspondence relied on by the Claimants from a Ukrainian official did not purport to waive Ukraine’s immunity, still less expressly or unequivocally as was required under English and international law, and the Claimants had in any event failed to discharge their burden of establishing that the correspondence was sent with Ukraine’s authority ([111]-[124]). 

As regards foreign act of state, the judgment provides importance guidance on this issue too, upholding the Defendants’ submission that insofar as the Claims were premised on allegations that the designation was unlawful as a matter of Ukrainian law, the English Court could not adjudicate on them ([125]-[166]).

As regards the allegations of intentional wrongdoing against Mrs Gontareva, Calver J summarised well-known guidance on the legal principles applicable to pleading and summarily dismissing such allegations ([168]-[171]) and held that there was no properly pleaded, coherent, or arguable case that Mrs Gontareva had engaged in such wrongdoing ([172]-[194]).

Andrew Scott (instructed by William Grace) appeared for Mrs Gontareva.

View the full judgment here

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